Regulation 2023/1115 of the European Parliament and of the Council of the European Union (EUDR)

In May 2023, the European Union approved the directive (EU) 2023/1115, which concerns the availability of certain commodities and products linked to deforestation and forest degradation on the EU market and their export from the Union. The directive was officially published on June 9, 2023 and will enter into force on June 29, 2023.

In order to combat climate change and the loss of biodiversity, the directive requires companies to ensure that products sold or exported from the EU do not cause deforestation or degradation processes in forests.

Products affected: The regulation focuses on seven commodities considered to be at risk from a forest perspective – cattle, cocoa, coffee, palm oil, rubber, soy and timber – and “related products” that contain or have been produced using these commodities.

Conditions for entering or leaving the EU market: Affected commodities and products may be listed on or exported from the EU market only if they meet three conditions:

– They are not a source of deforestation.

– The production took place in accordance with the relevant legislation of the country of origin.

– There is a due diligence statement.

Obligations of businesses: The Directive sets out due diligence, data collection and reporting obligations for all actors who place relevant commodities and their derivatives on the EU market or export them. The scope of obligations is determined according to the riskiness of the zone of origin, based on the evaluation of countries prepared by the European Commission.

Sanctions: Failure to comply with the directive can lead to fines from EU member states of up to 4 % of annual turnover throughout the EU; confiscation of the corresponding products or profits; temporary exclusion from public tenders and from the EU market in case of serious violations; and the ban on the implementation of simplified care.

The aim of this regulation is to support the transition to sustainable supply chains in all countries that produce products related to deforestation, whether inside or outside the EU, in particular by stimulating greener behavior by exporting companies. The regulation aims to initiate widespread influence from local producers to national governments by incentivizing firms to shift their activities from high-risk producers to lower-risk producers. (CO2 AI )